Reserve Bank deputy Governor Grant Spencer yesterday said Auckland house prices had risen threefold since 2002, and New Zealand was one of the few advanced economies that had not had a housing correction in the past 45 years.

He urged the Government to do more to address what he called an imbalance in the housing market.

Labour Party leader Andrew Little said that was basically Reserve Bank speak for 'there's a housing crisis'.

"Clearly the Government isn't doing enough. They've spent week after week denying there is a housing crisis.

"We know there is a crisis, particularly in Auckland and a growing number of people are being shut out of the housing market - that's not acceptable."

The Government had options to tackle the problem but it was not using them, he said.

"It can happen in terms of house building, it can happen in terms of policy to knock the speculators on the head but for heaven's sake - please do something."

"We don't normally see this kind of strong language from the Reserve Bank or indeed this quite direct criticism of the Government itself from the Reserve Bank and clearly they are exasperated by the Government's almost complete lack of action."

Mr Hague said the Government needed to introduce a capital gains tax on investment property before it was too late.

ACT Party leader David Seymour, MP for the Auckland suburb of Epsom, said the Government needed to get rid of the "draconian" regulations it had in place.

"Everybody now recognises there's a problem.

"The question is does New Zealand have the fortitude to accept the RMA (Resource Management Act) and our regulatory environment have got it wrong and we need to act fast before we create a tenant generation and a have and have not economically unstable society."

"There is no question that the Auckland housing market is strong because people perceive that it is going to continue to rise, whether that is right or not that is their perception, but also secondly, very low interest rates, strong migration and a renewed confidence in the economy overall."

Mr Key has also said he is open to the Reserve Bank exploring options to dampen the housing market, but he would not like to see a rise in interest rates.